Possible Apple TV subscription service faces uphill battle

Some TV networks are interested in Apple's plans to launch an Internet-only …

Two major TV networks are considering joining Apple's plan to offer TV subscriptions over the Internet in a venture that could put Apple in direct competition with cable and satellite providers. Disney and CBS are both taking a liking to the deal, according to sources speaking to the Wall Street Journal. However, the rumored details of the service may keep other networks away, and with cable providers looking at a potential hit in the wallet from the service (and even buying broadcast networks), it faces an uphill battle before seeing the light of day.

News about Apple's plans leaked in November, with multiple industry insiders saying that Apple may eventually launch the subscription service for a $30 monthly fee which would allow subscribers to watch whatever TV they like. The service would supposedly be an extension of the iTunes Store and not just limited to the Apple TV, although the set-top box would make perfect sense and give it a little more purpose than it currently holds. At the time of the leak, no TV networks had gotten on board yet, but Apple's VP of Internet Services, Eddy Cue, had been charged with drumming up interest.

There are still no networks on board—those speaking to the WSJ said that the talks are in the early stages—but Disney and CBS have apparently taken the bait. Disney is considering adding programs from ABC, Disney Channel, and ABC Family Networks, while CBS may offer shows from CBS and CW.

Apple is considering paying media companies $2 to $4 per month per subscriber for a broadcast network and $1 to $2 per month per subscriber for basic cable networks—much higher than what the networks currently receive from distributors. The catch is that Apple wants to sell the service without ads. That's great for users; not so great for the networks. "You don't want to shoot a hole in the bucket to create another revenue stream," an unnamed media executive told the WSJ.

The venture sounds promising for those of us who have long ditched our cable TV subscriptions in favor of Internet video from iTunes, Netflix, and Hulu. Even with all those options, it can sometimes be difficult to get access to your favorite shows from networks that are steadfastly refusing to put things up on iTunes until long after the current season is over (we're looking at you, Dexter season 4). Paying for a moderately priced video delivery service without ads could be a hit—and that's what terrifies cable companies like Comcast and Time Warner.

Comcast recently began to roll out its own Internet video initiative called Xfinity TV, but the offerings from major networks like HBO and Cinemax are only available to customers who already subscribe to both Internet and cable TV services—not one or the other—and only those who already pay extra for access to those channels. The company is doing this in order to maintain its lucrative TV subscriber base without losing them to the Internet altogether, but if Apple's TV service takes off, that's exactly what could happen with some users. An Internet-only TV subscription service has never been tried before, and the cable companies know that it could reduce them to nothing more than dumb pipes.

As a result, networks that rely heavily on cable subscriptions may feel pressure from cable providers not to join Apple's venture, meaning that Apple could then have a hard time getting enough networks on board to attract customers. The most obvious example of this is Comcast's purchase of NBC Universal—NBC has already had some troubles dealing with Apple in the past, and Comcast would like nothing more than to not have to compete directly with Apple and the Internet for viewers. With the NBC peacock strutting under a Comcast logo, it's hard to imagine content from that network showing up on the service.

Of course, at such an early stage of the game, such speculation is just that: speculation. There are no deals yet, and nothing may come of the negotiations. But the combo of Apple, iTunes, and the fabled Apple tablet make for a sumptuous holiday rumor meal.